There seems to be no ceiling to how high home prices can go in the United States. Look no further than the latest data from Fannie Mae, which recently raised its home price forecast for 2022 even after prices have risen at record rates.
By Vance Cariaga
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Fannie Mae now estimates that the median U.S. home price in 2022 will climb 11.2% from a year ago to $384,000, Fortune reported. That’s well up from Fannie Mae’s earlier forecast of a 7.9% price increase.
Zillow sees even greater price appreciation this year, having recently revised its 2022 growth estimate to 17.2% from a previous estimate of 11%.
Even if prices rise 17,.2% this year, as Zillow predicts (for now), it would technically represent a deceleration. But it would also represent the second-fastest annual growth rate, behind 2021. That will be small comfort to home buyers who are already facing higher borrowing costs in 2022 as the Federal Reserve implements its plan to raise interest rates to combat inflation.
One reason home prices are surging is because of a shortage of available homes for sale as the construction industry battles a number of headwinds, including rising prices of raw materials, supply chain disruptions, and a shortage of workers.
If you’re a house hunter, about the best you can hope for now is that the combination of rising prices and higher mortgage rates will cause large numbers of other potential buyers to forego their plans until the market corrects itself. If that happens, price acceleration could slow to more normal levels.
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“The effect of buyers being priced out should mean fewer bidding wars and slower house price appreciation,” Fannie Mae economists wrote in their latest outlook.
